Philip Chronican draws on over 30 years experience in banking to reflect upon the Global Financial Crisis, and how it exposed major flaws in the finance profession. He discusses the value of industry leaders taking The BFSO, in that their message will filter down through the organisational hierarchy and influence individuals to commit to ethical behaviour.
I’ve been working in banking for a little over thirty years. You don’t do that unless deep down there’s something that you love about the industry. It means something to me that banks lend money to people to build businesses, to buy a home and to manage life’s ups and downs.
When the financial crisis hit in 2008, I had mixed emotions. On one level, I was pleased that our Australian banks had proven more secure and reliable than many overseas. On the other hand, however, I was deeply embarrassed that the industry I had committed so much time to, and institutions I had held in such high regard, had proven to be so fundamentally flawed at their core.
That is why I subscribed to the Banking and Financial Services Oath. To me, it is an important and very public way in which people in the industry can stand up and say there is a better way. The behaviours that marked the worst of the excesses (such as the LIBOR rigging and the obsessive culture around bonuses) need not be a part of a healthy functioning finance industry.
I like that the Banking and Financial Services Oath is an individual pledge, and not driven by organisational accountability. Too often we look to organisations to adopt policies and targets and make boards accountable for a multitude of outcomes. This creates the notion that it’s someone else’s issue. The Oath is different; it asks individuals in the industry to stand up and be counted.
This Oath puts a special onus on people in leadership positions. Firstly, leaders have to lead by example. We sign the Oath and our participation signifies a ‘green light’ to our people that this is a good thing to do.
Secondly, we are in a position to help shape the way our organisations work. We set the rules, the incentive structures, the whole culture. It is very difficult for our people to endeavour to conduct themselves ethically in all their dealings if the organisation sends conflicting signals through the people we promote and the behaviours we reward.
Lastly, leaders and their actions are visible. If we make a commitment to behave ethically and don’t adhere to that standard, our actions will stand out much more for people further down the organisational hierarchy.
Ethics is a different ballgame for leaders because we are charged with making the big decisions that shape culture and because we are publicly accountable for them.